Morning Download 

Personal finance + economics + markets

Good morning investors! It’s the beginning of a new week so let’s start it with this fun fact:

Fun fact: “Established in 20 March 1602, the Dutch East India Company is considered the first-ever publicly traded company. Now defunct, the company issued shares to investors, allowing them to participate in the profits and losses of the company giving the world the idea of today’s share market.”

Today we cover:

• Rental apartments are getting affordable.

• Where Buffett’s investing.

• How you can get the best investment property.

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📊 Economy and News 

Homes are about to get affordable (for renters)

Apartment rental rates have been declining for a few months now and it seems that they will continue to decline.

What’s the average rent: The average rent in the country is $1,702 for the average apartment measuring 897 square feet.

About 35% of people in the US live in rented apartments, so lower prices can really help people affected by higher inflation and food costs.

What do numbers say? Rents in August were just 0.28% higher than rents in August 2022, In comparison, rents were growing at a rate of 11% last year.

How to benefit from reducing rents:

• Talk to your landlord about reducing your rent, even if your contract has no such conditions. 🏡 

• You can highlight how they will not be able to find someone willing to pay the same rate. 💵 

• If your landlord is unwilling then consider moving to another home but only after you calculate the cost of moving as it can be significant, especially if you’re moving far. 🛳

Cheapest states: Rent differs from state to state. The most affordable states in the U.S. are:

• Oklahoma, where the average rent goes for $979/month.

• Arkansas, where renters pay $1,017/mo on average.

• North Dakota, where the average rent goes for $1,035/mo.

While rents nationally haven’t gone negative yet, we’re already seeing negative numbers in some major states:

• Austin, Texas (-4.9%)

• Phoenix (-4.9%)

• Las Vegas (4.7%)

• Atlanta (-3.7%)

• Florida (-3.4%)

So, why is this happening?

Because there are more homes than ever.

The number of new units being built is at a 50-year high, with more than 460,000 being completed this year alone. Over a million new units have been built in the past three years.

The demand and supply theory is working here. Increasing supply is pushing the price lower. And this may continue until 2025, so gear up.

Global hits:

• India continues to grow an alternative to China attracting more FDI.

• Hong Kong is again stalling stock trading.

• European stocks preparing for another poor run.

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📈 Stocks

S&P 500 4,457.49 (0.14%)
DJIA 34,576.59 (0.22%)
NASDAQ 15,280.23 (0.14%)
VIX 13.84 (-3.89%)
* Prices as of Sep 11th, 12:20 AM UTC

Buffett is investing in housing stocks

Warren Buffett’s Berkshire Hathaway is in the news for investing in three homebuilders: NVR, DHI, and LEN.

This comes at a time when housing sales are decreasing due to high interest rates and more people are looking to rent.

Predictions: Morningstar currently forecasts total housing starts to decline 17% in 2023 to 1.295 million units, with single-family starts 18% lower to 0.825 million units and multifamily starts down 14.5% to 0.470 million units.

The company expects housing to begin to rebound in 2024.

What else? Buffett sold $8 billion worth of shares, according to the latest filing, and only invested $5 billion in the market.

Our take: This indicates he isn’t very keen on the market valuations right now, but he seems to have faith in real estate.

🔐 Crypto

Bitcoin $25,737.40 (0.62%)
Ethereum $1,615.78 (1.18%)
Total market cap $1..03 (0.99%)
* Prices as of Sep 11th, 12:20 AM UTC

Here’s what happened in the crypto world over the weekend

• SEC continues the fight against Ripple.

• Portugal continues to attract crypto lovers as the US makes it more difficult to survive.

• G20 offers an international crypto framework but it will not come into play now.

• Faruk Fatih Ozer, the founder of failed crypto exchange Thodex, sentenced to 11,196 years in prison.

💵 Personal Finance

Things to consider when buying a home (for investment)

Real estate is a great investment. It offers high returns, not only in the form of rent but also capital appreciation.

However, you have to be careful when buying a property. Here’s what to remember:

The location

This factor depends your rent, the type of people you will work with, and your vacancy rate. Some neighborhoods are more in demand than others, and you should ideally look for a neighborhood that’s in demand so that your home doesn’t stay vacant for too long.

Also, remember that some towns discourage rental conversions by imposing exorbitant permit fees and piling on red tape.

Taxes

You will have to pay a variety of taxes on your property. There is no way to avoid taxes but you can play smart by doing some research and knowing about expected tax increases.

Avoid regions that are known to put excessive tax pressure.

Facilities

You should ideally buy a home in a neighborhood that offers facilities such as schools, hospitals, parks, and more. Homes closer to such locations tend to generate more interest. Furthermore, also look at what kind of developments are expected.

• Are new buildings such as big malls being constructed?

• Is the government spending on new metro system?

Such changes can boost value and help you in the future.

Safety

No body wants a house in a neighborhood that isn’t safe, so do your research and look at factors such as homicide rate, theft rate, etc. Look whether such activity is on the rise or decline.

In addition, you should also look at how prone the region is to natural disasters. Storms, for example, are very common in some parts of the US, Canada, etc. The same goes for fires in Australia. You should idealy stay away from neighborhoods that

Other than this, pay attention to the job market. Towns that pay well and offer good jobs are more in demand than towns where jobs are scarce. In fact, some cities are losing college graduates due to a poor job market. You don’t want to make the mistake of investing in such towns.

Next, consider the type of property. Do you want a commercial property or do you wish to invest in a residential property? Each may have more options, i.e.: a condo, a villa, or an office.

Note: see if you are eligible for discounts, i.e. if you are buying for yourself or if you are a first time home buyer.

Check this video for more on buying a property:

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.